Tax Compliances for Online Sellers in India

Online sellers using e-commerce platforms face various deductions such as shipping costs, commissions, GST TCS, Income Tax TDS, and other charges. To ensure compliance with tax regulations, they need to follow these guidelines:

1. GST Compliances

• GSTR-1 Filing:
  • A monthly or quarterly statement of outward supplies of goods and services.
  • Contains details of all outward supplies made by the seller.
• TCS Return Filing:
  • Sellers must accept the Tax Collected at Source (TCS) by e-commerce platforms and file GSTR-3B accordingly.
• GSTR-3B Filing:
  • This simplified summary return helps taxpayers declare their summary GST liabilities for a particular period.
  • After claiming Input Tax Credit (ITC), sellers must pay the differential tax.
• GSTR-9 Filing:
  • An annual compilation of outward supplies, inward supplies, tax liability, and input tax credit availed.
  • Due by 31st December following the relevant financial year.

2. TDS Compliances

• Section 194C (Income Tax Act):
  • Sellers must pay TDS for availing shipping services.
  • After filing TDS Return (FORM 26Q), sellers can claim the amount from e-commerce operators by uploading FORM 16A.
• Section 194H (Income Tax Act):
  • TDS on commission deducted from collections.
  • After filing FORM 26Q, sellers can claim from e-commerce operators by uploading FORM 16A.
• Key Requirements:
  • Payment of TDS.
  • Filing TDS Return (FORM 26Q).
  • Generating FORM 16A.
  • Claiming TDS from e-commerce operators.

3. Income Tax Compliances

• Claiming TDS under Section 194O:
  • Sellers must claim TDS deducted by e-commerce operators under this section.
• Income Tax Return Filing:
  • Ensure timely and accurate filing of income tax returns.
• Tax Audit (if applicable):
  • Mandatory for businesses with turnover exceeding Rs. 1 crore in a financial year.
  • If cash transactions are up to 5% of total payments and receipts, the threshold limit for a tax audit increases to Rs. 10 crores.

4. Accounting Practices

To maintain proper financial records, online sellers should:

• Record Sales and File Returns: As per GST and income tax requirements.
• Record Purchases and File Returns: To ensure input tax credits.
• Record Expenses:
  • Shipping expenses
  • Commission expenses
  • Advertisement expenses
  • Other expenses related to online sales
• Claim Depreciation: On eligible business assets.

By following these tax compliances and maintaining accurate records, online sellers can ensure legal adherence and avoid penalties.